#U.S. Treasury bonds

[youthchronical]

10-year Treasury yield rises above 4.3% as traders ignore noisy jobs report

The yield on the 10-year Treasury rose as traders downplayed October jobs data showing meager job growth that was hurt by hurricanes and striking workers, and was far below what Wall Street was expecting. The 10-year Treasury yield jumped nearly 10 basis points at 4.382%. The 2-year Treasury yield was higher by 5 basis points at 4.216%. The uptick in yields marks a continuation of their recent…

[siliconpalms]

Japan's Strategic Shift: Dumping U.S. Bonds and Its Implications

Recent reports indicate a significant shift in Japan’s approach to holding U.S. bonds. Norinchukin Bank, a major Japanese agricultural bank, has announced plans to sell a substantial portion of its U.S. and European sovereign bonds, reflecting a broader trend in the global bond market. This development has far-reaching implications for the U.S. economy and global investors. Here’s a detailed look…

[betty-bourgeoisie]

Honestly I really don't view Alfred as being especially wealthy compared to any of the other nations. The country he represents has a lot of money sure, but he's a government bureaucrat with the same union contract and dental insurance as any other government bureaucrat.

[todaysdocument]

Notice concerning treasury notes taken during a Confederate raid in St. Alban's, Vermont

Record Group 233: Records of the U.S. House of RepresentativesSeries: Accompanying PapersFile Unit: Accompanying Papers of the 43rd Congress

LOSS OF

U. S. 7-30 TREASURY NOTES

WITH COUPONS AND U. S. COUPON BONDS.

Taken from the First National Bank of St. Albans, Vt., by raiders,

on the 19th of October, 1864, the following 7-30 Treasury Notes and

U. S. 5-20 Bonds, together with all coupons attached, the coupons of

former payable the 15th of August and 15th of February, and those

of the latter payable May 1 and November 1, of each year, viz:

4 $1,000 7-30 Treasury Notes, Nos. 18,681 to 18,684 inclusive.

19 $500 " " " Nos. 28,083 to 28,101 "

102 $100 " " " Nos. 184,073 to 184,172 "

also Nos. 142,563 and 142,574

109 $50 " " " Nos. 16,285 to 16,296 "

20,587 to 20,640 "

30,088 to 30,096 "

134,960 to 134,980 "

20,645 to 20,646 "

20,665 to 20,673 "

134,947 and 30,081

all payable to blank order and dated Aug. 15, 1864.

Also one $1,000 U. S. 5-20 Coupon Bond, No. 7,901, no series,

and two $100 U.S. 5-20 Coupon Bonds, Nos. 45,087 and 45,089, 2d

series, dated May 1, 1862.

The above mentioned Treasury Notes and Bonds have been cave-

ated upon the Books of the Treasury Department, and this notice is

to warn all persons against purchasing either the Treasury Notes,

Bonds, or Coupons.

[soon-palestine]

"As Israel continues its relentless bombing of Palestinians, raising the death toll in Gaza to over 27,000 people, state & local treasuries across the United States are investing 100s of millions in the state of Israel by purchasing Israeli bonds."

[dreaminginthedeepsouth]

Max Gustafson

* * * *

LETTERS FROM AN AMERICAN

March 12, 2023

Heather Cox Richardson

At 6:15 this evening, Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and Federal Deposit Insurance Corporation (FDIC) Chairman Martin J. Gruenberg announced that Secretary Yellen has signed off on measures to enable the FDIC to fully protect everyone who had money in Silicon Valley Bank, Santa Clara, California, and Signature Bank, New York. They will have access to all of their money starting Monday, March 13. None of the losses associated with this resolution, the statement said, “will be borne by the taxpayer.”

But, it continued, “Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

The statement ended by assuring Americans that “the U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today's actions demonstrate our commitment to take the necessary steps to ensure that depositors' savings remain safe.”

It’s been quite a weekend.

On Friday, Silicon Valley Bank (SVB) failed in the largest bank failure since 2008. At the end of December 2022, SVB appears to have had about $209 billion in total assets and about $175 billion in deposits. This made SVB the sixteenth largest bank in the U.S., big in its sector but small compared with the more than $3 trillion JPMorgan Chase. This is the first bank failure of the Biden presidency (while Donald Trump Jr. tweeted that he had not heard of any bank failures during his father’s presidency, there were sixteen, eight of which happened before the pandemic). In fact, generally, a few banks fail every year; it is an oddity that none failed in 2021 or 2022.

The failure of SVB created shock waves for three reasons. First, SVB was the major bank for technology start-ups, so it involved much of a single sector of the economy. Second, only about $8 billion of the $173 billion worth of deposits in SVB were less than the $250,000 that the FDIC insures, meaning that the companies who had made those deposits might not get their money back quickly and thus might not be able to make payrolls, sparking a larger crisis. Third, there was concern that the problems that plagued SVB might cause other banks to fail, as well.

What seems to have happened, though, appears to be specific to SVB. Bloomberg’s Matt Levine explained it most clearly:

As the bank for start-ups, which have a lot of cash from investors and the initial public offering of stock, SVB had lots of deposits. But start-up companies don’t need much in the way of loans because they’ve just gotten so much cash and they don’t yet have fixed assets. So, rather than balancing deposits with loans that fluctuate with interest rates and thus keep a bank on an even keel, SVB’s directors took a gamble that the Federal Reserve would not raise interest rates. They invested in long-term Treasury bonds that paid better interest rates than short-term securities. But when, in fact, interest rates went up, the value of those long-term bonds sank.  

For most banks, higher interest rates are good news because they can charge more for loans. But for SVB, they hurt.

Then, because SVB concentrated on start-ups, they had another problem. Start-ups are also hurt by rising interest rates because they tend to promise to deliver returns in the long term, which is fine so long as interest rates stay steadily low, as they have been now for years. But as interest rates go up, investors tend to like faster returns than most start-ups can deliver. They take their money to places that are going to see returns sooner. For SVB, that meant their depositors began to need some of that money they had dumped into the bank and started to withdraw their deposits.

So SVB sold securities at a loss to cover those deposits. Other investors panicked as they saw SVB selling at a loss and losing deposits, and they, too, started yanking their money out of the bank, collapsing it. Banks that have a more diverse client base are less likely to lose everyone all at once.

The FDIC took control of the bank on Friday. On Sunday, regulators also shut down Signature Bank, based in New York, which was a major bank for the cryptocurrency industry. Another crypto-friendly bank, Silvergate, failed last week.

Congress created the FDIC under the Banking Act of 1933 to restore trust in the American banking system after more than a third of U.S. banks failed after the Great Crash of 1929, sparking runs on banks as depositors rushed to take out their money whenever rumors suggested a bank was in trouble, thus causing more failures. The FDIC is an independent agency that insures deposits, examines and supervises banks to make sure they’re healthy, and manages the fallout when they’re not. The FDIC is backed by the full faith and credit of the government, but it is not funded by the government. Member banks pay insurance dues to cover bank failures, and when that isn’t enough money, the FDIC can borrow from the federal government or issue debt.

Over the weekend, the crisis at SVB became a larger argument over the role of government in the protection of the economy. Tech leaders took to social media to insist that the government must cover all the deposits in the failed bank, not just the ones covered under FDIC. They warned that the companies whose deposits were uninsured would fail, taking down the rest of the economy with them.

Others noted that the very men who were arguing the government should protect all the depositors’ money, not just that protected under the FDIC, have been vocal in opposing both government regulation of their industry and government relief for student loan debt, suggesting that they hate government action…except for themselves. They also pointed out that in 2018, under Trump, Congress weakened government regulations for banks like SVB and that SVB’s president had been a leading advocate for weakening those regulations. Had those regulations been in place, they argue, SVB would have remained solvent.

It appears that Yellen, Powell, and Gruenberg, in consultation with the president (as required), concluded that the collapse of SVB and Signature Bank was a systemic threat to the nation’s whole financial system, or perhaps they concluded that the panic over that collapse—which is a different thing than the collapse itself—was a threat to the nation’s financial system. They apparently decided to backstop the banks to prevent more damage. But they are eager to remind people that they are not using taxpayer money to shore up a poorly managed bank.

Right now, this appears to leave us with two takeaways. The Biden administration had been considering tightening the banking regulations that were loosened under Trump, and it seems likely that the need for the federal government to step in to protect the depositors at SVB and Signature Bank will make it much harder for those opposed to regulation to keep that from happening. There will likely be increased pressure on the Biden administration to guard against helping out the wealthy and corporations rather than ordinary Americans.

And, perhaps even more important, the weekend of panic and fear over the collapse of just one major bank should make it clear that the Republicans’ threat to default on the U.S. debt, thus pulling the rug out from under the entire U.S. economy unless they get their way, is simply unthinkable.

LETTERS FROM AN AMERICAN

HEATHER COX RICHARDSON

[misfitwashere]

The one big constraint on Trump

ROBERT REICH

NOV 25

Friends,

Will anything stop Trump? 

He will have control over both chambers of Congress, a tractable Supreme Court, a political base of fiercely loyal MAGAs, a media ecosystem that amplifies his lies (now including Musk’s horrific X as well as Rupert Murdoch’s reliably mendacious Fox News), and a thin majority of voters in the 2024 election. 

He doesn’t worry about another election because he won’t be eligible to run again (or he’ll ignore the Constitution and stay on). 

Of course, there are the midterm elections of 2026. But even if Democrats take back both chambers, Trump and his incipient administration are aiming to wreak so much havoc on America in the meantime that Democrats can’t remedy it. 

The Republican-controlled Senate starting January 3 won’t restrain Trump. Yes, Trump overreached with his pick of Matt Gaetz for attorney general. Apparently even Senate Republicans can’t abide sex trafficking girls for drug-infested orgies, but this is a very low bar. 

So, as a practical matter, is anything stopping Trump? 

Yes, and here’s a hint of what it is: On Friday, Trump picked Scott Bessent to serve as treasury secretary. 

Bessent is the man Elon Musk derided only a week ago as the “business-as-usual choice” for treasury secretary, in contrast to Howard Lutnick, who Musk said would “actually enact change.” 

Musk’s view of “change” is to blow a place up, which was what Musk did when he bought Twitter. 

Over the last two weeks, Musk has convinced Trump to appoint bomb-throwers Robert F. Kennedy Jr. to Health and Human Services and Pete Hegseth to Defense, and to put Musk and Vivek Ramaswamy in charge of cutting $2 trillion from the federal budget. 

But Bessent is the opposite of a bomb-thrower. He’s a billionaire hedge fund manager, founder of the investment firm Key Square Capital Management, and a protege of the MAGA arch-villain George Soros (he’s also gay, which the MAGA base may not like, either). 

Why did Trump appoint the “business as usual” Bessent to be treasury secretary? Because the treasury secretary is the most important economic job in the U.S. government. 

Trump has never understood much about economics, but he knows two things: High interest rates can throttle an economy (and bring down a president’s party), and high stock prices are good (at least for Trump and his investor class). 

Trump doesn’t want to do anything that will cause bond traders to raise long-term interest rates out of fear of future inflation, and he wants stock traders to be so optimistic about corporate profits they raise share prices. 

So he has appointed a treasury secretary who will reassure the bond and stock markets. 

Stock and bond markets constitute the only real constraint on Trump — the only things whose power he’s afraid of. 

But wait. What about Trump’s plan to raise tariffs? He’s floated a blanket tariff of 10 to 20 percent on nearly all imports, 25 percent on imports from Mexico, and 60 percent or more on Chinese goods.

Tariffs of this size would increase consumer prices and fuel inflation — driving interest rates upward. (The cost of tariffs are borne by American businesses and households, rather than foreign companies.)

Tariffs could also invite retaliation from foreign governments and thereby dry up export markets for American-based corporations — in which case the stock market would tank. (The last time America raised tariffs on all imports — Herbert Hoover’s and Congressmen Smoot and Hawley’s Tariff Act of 1930 — the Great Depression worsened.) 

In short, tariffs will rattle stock and bond markets, doing the exact opposite of what Trump wants. 

So Trump has appointed a treasury secretary who will soothe Wall Street’s nerves — not just because Bessent is a Wall Street billionaire who speaks the Street’s language but also because the Street doesn’t really believeBessent wants higher tariffs. 

Bessent has described Trump’s plan for blanket tariffs as a “maximalist” negotiating strategy — suggesting Trump’s whole tariff proposal is a strategic bluff. The Street apparently thinks tariffs won’t rise much when other countries respond to the bluff with what Trump sees as concessions. 

Instead, the Street expects Bessent to be spending his energies seeking lower taxes, especially for big corporations and wealthy Americans, and helping Musk and Ramaswamy cut spending and roll back regulations.

It’s a sad commentary on the state of American democracy when the main constraint on the madman soon to occupy the Oval Office is Wall Street. 

I suppose we should be grateful there’s any constraint at all. 

[dertaglichedan]

What to know about Scott Bessent, Trump's U.S. Treasury pick

Treasury secretary, which would make him the incoming administration's top economic official.

Why it matters: Bessent would bring to Treasury deep knowledge of bond and currency markets and a close relationship with Trump — as well as a surprising connection to hedge fund manager George Soros, mega-donor to liberal causes and bogeyman to the political right.

Zoom in: Bessent, 62, founded hedge fund Key Square Capital Management. Before that, he spent most of his career at Soros Capital Management, including as chief investment officer from 2011 to 2015.

Bessent has been an avid fundraiser for Trump and a defender of the president-elect in media appearances.

Trump has threatened to impose high tariffs on all U.S. imports. Some economists have warned that such aggressive tariffs could reignite inflation.

In recent interviews, Bessent has tried to play down Trump's trade threats.

"The idea that he would recreate an affordability crisis is absurd," Bessent told Axios' Mike Allen in a phone interview this earlier this month.

Bessent told Axios that Trump "regards himself as the mayor of 330 million Americans, and he wants them to do great, and have a great four years."

He also told the Financial Times last month that the tariffs were a starting point for negotiations with trading partners.

"My general view is that at the end of the day, he's a free trader," Bessent told the FT.

The intrigue: Bessent has been critical of the Federal Reserve and will likely be a key voice as Trump selects his appointees to run the central bank.

Last month, he put forth a novel and unorthodox idea to name a "shadow Fed chair" who would be heir apparent to Jerome Powell when Powell's term is up in 2026. The idea was criticized for the potential impact on financial markets.

Bessent has since backtracked on this idea. Speaking on CNBC earlier this month in the aftermath of the election, he clarified that he thinks the incoming Trump administration "should nominate the next Federal Reserve chair early."

...

Bessent is married to John Freeman, a former prosecutor, and they have two children. If confirmed, Bessent would be the first openly gay Treasury secretary. They live primarily in Charleston, S.C., and preserve historic mansions, per the Wall Street Journal.

*** Libs losing their minds over the last footnote in this article. LOL

[sataniccapitalist]

The P.R. genius at JPMorgan Chase that thought it would be a good idea to have Jamie Dimon lecture the next president of the United States on how to run the country in an OpEd (paywall) at the Washington Post will likely be seeking a career change soon.

Dimon is the Chairman and CEO of the largest and riskiest bank in the United States. Under Dimon’s tenure, the bank has racked up five felony counts which showcase Dimon as the worst possible source of sound leadership advice. In 2014, the bank was charged with laundering money for decades for the biggest Ponzi artist in U.S. history – Bernie Madoff. In 2015, the bank was charged with being part of a bank cartel that rigged foreign currency markets. And in 2020, the bank was charged with two more felony counts for engaging in “tens of thousands of instances of unlawful trading in gold, silver, platinum, and palladium…as well as thousands of instances of unlawful trading in U.S. Treasury futures contracts and in U.S. Treasury notes and bonds…”

Not to put too fine a point on it, but U.S. Treasury notes and bonds are how our government pays its debts. Apparently, nothing is sacred at Dimon’s bank.

The bank admitted to all five felony counts and paid large fines in order to get off easy with deferred prosecution agreements from the U.S. Department of Justice.

[mariacallous]

Recently, mortgage rates have reversed some of their increase since 2020, coming down from their recent peak in late 2023. In this piece, we update previous analyses to explore what factors led to the increase through 2023 and what has led to the partial reversal. Overall, the increase in mortgage rates since 2020 reflects a broad increase in rates on long-term U.S. Treasury securities. But the increase in 30-year fixed mortgage rates, particularly from early 2022 through late 2023, has been unusually large relative to rates on long-term Treasury securities, which may suggest that mortgage rates are being pushed up by more temporary factors. Looking at the most recent data, we find that some of those temporary factors are unwinding. If those factors continue to unwind and long-term Treasury rates continue to decline, mortgage rates would also see further declines.  

In our previous piece, we investigated why mortgage rates through late 2023 rose so much more than yields on 10-year Treasury bonds. We found that roughly half of the increase in this spread could be attributed to two factors: Interest rates on Treasury bonds with maturities of less than 10 years were higher than rates on 10-year Treasury bonds, and mortgage prepayment risk had increased. The remainder of the increase in the spread was attributed to other factors, such as reduced demand for financial instruments backed by mortgages. 

[siliconpalms]

Navigating the Complexities of US Treasury Bond Repo Rates in the Era of a $34 Trillion National Debt

In an era where the U.S. national debt has soared to an unprecedented $34 trillion, understanding the intricacies of the Treasury bond repo rate becomes crucial for astute investors. This blog post aims to shed light on the potential risks and indicators to watch in this complex financial landscape, particularly as we move further into 2024. Understanding Repo Rates in the Context of…

[thatdiabolicalfeminist]

By Steve Holland, Gram Slattery and Katharine Jackson

May 27, 20236:25 PM PDT

Updated a min ago

WASHINGTON, May 27 (Reuters) - U.S. President Joe Biden and top congressional Republican Kevin McCarthy have reached a tentative deal to raise the federal government's $31.4 trillion debt ceiling, ending a months-long stalemate.

However, the deal was described in terms that indicated it may not be absolute, and without any celebration -- an indication of the bitter tenor of the negotiations, and the difficult path it has to pass through Congress before the United States runs out of money to pay its debts in early June.

"I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we've come to an agreement in principle that is worthy of the American people," McCarthy tweeted.

The deal would raise the debt limit for two years while capping spending over that time, and includes some extra work requirements for programs for the poor.

Biden and McCarthy held a 90-minute phone call earlier on Saturday evening to discuss the deal.

"We still have more work to do tonight to finish the writing of it," McCarthy told reporters on Capitol Hill. McCarthy said he expects to finish writing the bill Sunday, then speak to Biden and have a vote on the deal on Wednesday.

The deal will avert an economically destabilizing default, so long as they succeed in passing it through the narrowly divided Congress before the Treasury Department runs short of money to cover all its obligations, which it warned Friday will occur if the debt ceiling is not raised by June 5.

Republicans who control the House of Representatives have pushed for steep cuts to spending and other conditions, including new work requirements on some benefit programs for low-income Americans and for funds to be stripped from the Internal Revenue Service, the U.S. tax agency.

They said they want to slow the growth of the U.S. debt, which is now roughly equal to the annual output of the country's economy.

Negotiators have agreed to cap non-defense discretionary spending at 2023 levels for one year and increase it by 1% in 2025, sources said.

The two sides have to carefully thread the needle in finding a compromise that can clear the House, with a 222-213 Republican majority, and Senate, with a 51-49 Democratic majority.

One high-ranking member of the hardline House Freedom Caucus said they were in the process of gauging member sentiment, and unsure what the vote numbers might be.

The long standoff spooked financial markets, weighing on stocks and forcing the United States to pay record-high interest rates in some bond sales. A default would take a far heavier toll, economists say, likely pushing the nation into recession, shaking the world economy and leading to a spike in unemployment.

Biden for months refused to negotiate with McCarthy over future spending cuts, demanding that lawmakers first pass a "clean" debt-ceiling increase free of other conditions, and present a 2024 budget proposal to counter his issued in March. Two-way negotiations between Biden and McCarthy began in earnest on May 16.

Democrats accused Republicans of playing a dangerous game of brinkmanship with the economy. Republicans say recent increased government spending is fueling the growth of the U.S. debt, which is now roughly equal to the annual output of the economy.

The last time the nation got this close to default was in 2011, when Washington also had a Democratic president and Senate and a Republican-led House.

Congress eventually averted default, but the economy endured heavy shocks, including the first-ever downgrade of the United States' top-tier credit rating and a major stock sell-off.

The work to raise the debt ceiling is far from done. McCarthy has vowed to give House members 72 hours to read the legislation before bringing it to the floor for a vote. That will test whether enough moderate members support the compromises in the bill to overcome opposition from both hard-right Republicans and progressive Democrats.

Then it will need to pass the Senate, where it will need at least nine Republican votes to succeed. There are multiple opportunities in each chamber along the way to slow down the process.

The two sides had struggled to find common ground on spending levels. Republicans had pushed for an 8% cut to discretionary spending in the next fiscal year, followed by annual increases of 1% for several years.

Biden had proposed keeping spending flat in the 2024 fiscal year, which starts Oct. 1, and raising it 1% the year after that. He also had called for closing some tax loopholes, which Republicans rejected.

[tropiyas]

suite life on deck I will never forgive you for souring the idea of u.s. treasury bonds in my early childhood

[theworstfoundingfathers]

Who is the worst founding father? Round 2: John Marshall vs Alexander Hamilton

Note: Sorry. This one is the longest yet.

John Marshall (September 24, 1755 – July 6, 1835) was an American politician, lawyer, and Founding Father who served as the fourth chief justice of the United States from 1801 until his death in 1835. He remains the longest-serving chief justice and fourth-longest serving justice in the history of the U.S. Supreme Court, and is widely regarded as one of the most influential justices ever to serve. Prior to joining the court, Marshall briefly served as both the U.S. secretary of state under President John Adams, and a representative, in the U.S. House of Representatives from Virginia, thereby making him one of the few Americans to serve on all three branches of the United States federal government.

In the early 1790s, the Federalist Party and the Democratic-Republican Party emerged as the country was polarized by issues such as the French Revolutionary Wars and the power of the presidency and the federal government. Marshall aligned with the Federalists, and at Alexander Hamilton's request, he organized a Federalist movement in Virginia to counter the influence of Thomas Jefferson's Democratic-Republicans. Like most other Federalists, Marshall favored neutrality in foreign affairs, high tariffs, a strong executive, and a standing military.

Marshall believed that slavery was an evil, opposed the Atlantic slave trade, and feared increasing Southern focus on slavery would fracture the Union, as ultimately occurred; however, he owned slaves for most of his life. In 1783, his father Thomas Marshall as a wedding present gave John Marshall his first slave, Robin Spurlock, who would remain Marshall's manservant as well as run Marshall's Richmond household and upon Marshall's death receive a now-seemingly cruel choice of accepting manumission on the condition of emigrating to another state or to Africa (at age 78 and leaving his still-enslaved daughter Agnes) or choosing his master/mistress from among Marshall's children.

Alexander Hamilton (January 11, 1755 or 1757 – July 12, 1804) was a Nevisian-born American military officer, statesman, and Founding Father who served as the first United States secretary of the treasury from 1789 to 1795.

On February 15, 1781, while working as Washington's chief of staff, Hamilton was reprimanded by Washington after a minor misunderstanding. Although Washington quickly tried to mend their relationship, Hamilton insisted on leaving his staff. He officially left in March, and settled with his new wife Elizabeth Schuyler close to Washington's headquarters. He continued to repeatedly ask Washington and others for a field command. Washington continued to demur, citing the need to appoint men of higher rank. This continued until early July 1781, when Hamilton submitted a letter to Washington with his commission enclosed, "thus tacitly threatening to resign if he didn't get his desired command."

In 1784, Hamilton founded the Bank of New York.

Early during the Constitutional Convention Hamilton made a speech proposing a President-for-Life; it had no effect upon the deliberations of the convention. He proposed to have an elected president and elected senators who would serve for life, contingent upon "good behavior" and subject to removal for corruption or abuse; this idea contributed later to the hostile view of Hamilton as a monarchist sympathizer, held by James Madison.

During the Revolutionary War, affluent citizens had invested in bonds, and war veterans had been paid with promissory notes and IOUs that plummeted in price during the Confederation. In response, the war veterans sold the securities to speculators for as little as fifteen to twenty cents on the dollar. Hamilton felt the money from the bonds should not go to the soldiers who had shown little faith in the country's future, but the speculators that had bought the bonds from the soldiers.

Strong opposition to Hamilton's whiskey tax by cottage producers in remote, rural regions erupted into the Whiskey Rebellion in 1794; in Western Pennsylvania and western Virginia, whiskey was the basic export product and was fundamental to the local economy. In response to the rebellion, believing compliance with the laws was vital to the establishment of federal authority, Hamilton accompanied to the rebellion's site President Washington, General Henry "Light Horse Harry" Lee, and more federal troops than were ever assembled in one place during the Revolution. This overwhelming display of force intimidated the leaders of the insurrection, ending the rebellion virtually without bloodshed.

During the election of 1796, Hamilton urged all the northern electors to vote for Adams and Pinckney, lest Jefferson get in; but he cooperated with Edward Rutledge to have South Carolina's electors vote for Jefferson and Pinckney. If all this worked, Pinckney would have more votes than Adams, Pinckney would become president, and Adams would remain vice president, but it did not work. The Federalists found out about it and northern Federalists voted for Adams but not for Pinckney, in sufficient numbers that Pinckney came in third and Jefferson became vice president.

In the summer of 1797, Hamilton became the first major American politician publicly involved in a sex scandal. After engaging in an affair with 23-year-old Maria Reynolds, Hamilton was blackmailed by Reynolds's husband and ended up paying over $1300 in payments to him. After being arrested for counterfeiting and speculating, James Reynolds implied he had evidence of illegal activity by Hamilton during his time as Treasury Secretary. Threatened by attacks against his integrity as a public servant that claimed his business with James Reynolds had to with improper speculation, Hamilton published a 100-page booklet, later usually referred to as the Reynolds Pamphlet, and discussed the affair in indelicate detail for the time.

Hamilton served as inspector general of the United States Army from July 18, 1798, to June 15, 1800. If full-scale war broke out with France, Hamilton argued that the army should conquer the North American colonies of France's ally, Spain, bordering the United States.

To fund this army, Hamilton urged passage of a direct tax. The eventual program included taxes on land, houses, and slaves, calculated at different rates in different states and requiring assessment of houses, and a stamp act like that of the British before the Revolution, though this time Americans were taxing themselves through their own representatives.

Hamilton is not known to have ever owned slaves, although members of his family were slave owners. At the time of her death, Hamilton's mother owned two slaves and wrote a will leaving them to her sons. However, due to their illegitimacy, Hamilton and his brother were held ineligible to inherit her property and never took ownership of the slaves. He occasionally handled slave transactions as the legal representative of his own family members, and one of his grandsons interpreted some of these journal entries as being purchases for himself. In 1840, his son John maintained that his father "never owned a slave; but on the contrary, having learned that a domestic whom he had hired was about to be sold by her master, he immediately purchased her freedom."

[dreaminginthedeepsouth]

* * * *

Deal or no deal?

May 19, 2023

ROBERT B. HUBBELL

MAY 18, 2023

          As the weekend approaches, negotiators for the House and the administration are edging close to a deal—or not. It all depends on who you believe at what time of day. On Thursday, Speaker Kevin McCarthy suggested a deal could be reached this weekend. An hour later, a sizable chunk of McCarthy’s caucus told him to stop negotiating until the Senate passed the joke of a bill that the Freedom Caucus forced McCarthy to ram through the House. GOP Senator Josh Hawley said that if he were president, he would invoke the 14th Amendment to pay obligations incurred by Congress, even if that meant ignoring the debt ceiling.

          In other words, anything can still happen—from a negotiated deal to unilateral action by Biden to a vote to remove Kevin McCarthy as Speaker.

        As negotiations drag on, it is becoming ever clearer that the ceiling is a vestigial appendage that no longer functions as part of the US budgeting and spending processes. In the prior newsletters this week, I recommended an article by Robert Hockett in Forbes, Six Legal Reasons the Federal Budget Is Its Own ‘Debt Ceiling’ - and ‘Floor’.  The force of his arguments has convinced readers who have reviewed Hockett’s article.

          On Thursday, Robert Hockett joined Professor Laurence Tribe to author an even more powerful and devastating take-down of the debt ceiling. See The Hill, Biden can, and should, ignore the GOP’s debt suicide attempt. In short, it is beyond doubt that Congress has superseded the limitations of The Liberty Bond Act of 1917 by enacting subsequent legislation mandating that the President pay all obligations created in the budget process.

          A key concept in the Hockett/Tribe article is that the current crisis does not pit Congress against the President. Instead, the crisis pits Congress against itself—because it has lawfully created obligations through the budgeting process that it cannot subsequently refuse to honor by failing to raise the debt ceiling.

          Hockett and Tribe write:

Again, the debt that our country owes has already been legislated by Congress. The moment it budgets for federal expenditures and federal taxes, Congress also budgets for U.S. Treasury issuance to cover any gaps between the two. And this includes Treasury issuances to cover past-debt redemptions as they come due — debt repayment and servicing themselves being budget line items. 

          If you liked Hockett’s article, you will love the Hockett/Tribe article. It is time to rid ourselves of this meddlesome relic of the past that died a natural death decades ago when Congress passed the Budget and Impoundment Control Act of 1974. If Biden cannot reach an acceptable deal, he should challenge the debt ceiling directly by declaring that it has been superseded by subsequent legislation, is unconstitutional in the present circumstances, and is a financial time bomb that has no role in the world’s largest economy.

          Some commentators are resurrecting the falsehood that the current mess is the fault of Democrats because they failed to eliminate the debt ceiling between the November 2022 election and the start of the 118th Congress in January 2023—an interregnum during which Democrats controlled both chambers of Congress. There are two reasons Democrats did not eliminate the debt ceiling during that interim period: Joe Manchin and Kyrsten Sinema, both of whom view financial terrorism as a laudable “bi-partisan process.” See Talking Points Memo, No Revisionist History on a Lame Duck Debt Ceiling Vote.  

          It may be that the stronger the arguments become for ending the debt ceiling, the more realistic McCarthy will become in dealing with Biden. The real problem for McCarthy may be dealing with the Freedom Caucus of his own party, who will ask for a vote of no confidence on McCarthy if he makes a deal that varies from the bill Republicans passed earlier this month. In that case, Democrats may have to vote to keep McCarthy in his job so he can help pass compromise legislation—something that a group of forty Democrats has reportedly offered to do. See Politico, Centrist Dems are plotting a save-McCarthy strategy for the debt fight.

          So, buckle your seat belts and keep your hand and arms inside the moving vehicle! It could be a wild ride over the weekend, but there appear to be multiple pathways to success (including the discharge petition making its way through the House). That is progress from our situation a week ago.